IT Customer Loyalty, Satisfaction Increasing

Customer loyalty and satisfaction are on the rise in the IT market, according to NFO Prognostics, and this is good news for companies on the receiving end of the loyalty as budgets tighten.

Customer loyalty and satisfaction continue to rise in the information technology (IT) market, according to a survey from NFO Prognostics, which explored the professional services, software, computer and networking IT sectors.

According to the survey, "Customer Satisfaction in the IT Industry," customer loyalty scores are increasing in most segments of the IT market, a strong indication that IT vendors are paying more attention to their installed bases, doing a better job of retaining customers and having more success in defending their bases against their competition.

"Customer loyalty issues are more critical than ever to sector domination," said Tina Weinfurther, president and CEO of NFO Prognostics. "In certain areas such as the software business, there are still leading companies that exhibit high customer loyalty, yet still show low customer satisfaction, although the examples have become fewer over each of the last four years."

The survey measured four critical markers in determining customer satisfaction: ease of doing business, quality of products, support provided and price-value relationships. Vendors with low customer loyalty (installed-base repurchase intentions below 85 percent) displayed their greatest weaknesses in ease of doing business and technical support. In addition, professional services vendors have not been able to convert superior performance into sustainable repurchase intentions among current customers at the same rates found in hard goods segments of the IT industry.

While satisfaction scores and referenceability ratings are generally strong, respondents indicated that many professional services buyers are clearly "shopping" each new project on the basis of its unique technical requirements. Professional services vendors who are able to team effectively are going to have a competitive advantage. Professional services buyers show the lowest preference for "one-stop shopping" when it comes to supplier selection. Interestingly, customers who are upgrading on a regular basis are typically more loyal and more referenceable, and have more aggressive spending plans for their IT vendors.

Computer and networking product manufacturers are now experiencing the one-to-one correspondence between satisfaction and loyalty that is typical in mature, commoditized markets, NFO Prognostics found. More than 20,000 surveys were conducted in more than 40 countries across the professional services, software, computer and networking IT sectors.

Customer loyalty and satisfaction will also play in key role as companies tighten their spending budgets. The Spring 2001 IT Survey by Adams, Harkness & Hill surveyed more than 300 technology buyers and found total IT budget (hardware, software and services) growth is decelerating, expected to increase only 7 percent this year compared to 11 percent in 2000.

Spending on external services will decline by 2 percent among large businesses this year, while midsize and smaller businesses should increase services spending by 8 percent and 13 percent, respectively.

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